Wells Fargo said in a statement:

Customers with existing Wells Fargo Financial consumer loans and clients of Wells Fargo Financial’s commercial businesses will continue to be served without distruption, the company said. FHA home loans, auto loans and credit cards previously offered by Wells Fargo Financial will be consolidated with similar products across the company and will be offered through the company’s network of community banking stores, mortgage stores, phone banks and wellsfargo.com. Wells Fargo Financial’s commercial businesses will be realigned with business units within Wells Fargo over the next 12 months. However, Wells Fargo will no longer originate non-prime portfolio real estate loans.

Sub-prime mortgage loans have been a huge contributor to problems with the U.S. housing market. Many borrowers who received sub-prime loans have defaulted, while others are in a continuing never-ending battle to avoid foreclosure and keep their homes.

Sub-prime borrowers have flosked to the government’s loan modification plan in droves to seek assistance, although many have been unsuccessful in their attempts to get help.

Wells Fargo merged with Wachovia in 2008. In the first quarter of 2010 less than 2% of Wells Fargo’s real estate loans originated in Wells Fargo Financial Stores.

The Federal Reserve this week cut interest rates by half a percent to help homeowners grappling with the subprime fallout. In his first public address since the rate slash, chairman Benjamin Bernanke managed to keep his optimism in check.

“The market for subprime mortgages has adjusted sharply and originators now are employing tighter underwriting standards,” Mr. Bernanke testified this week to the U.S. House of Representatives’ Committee on Financial Services. “The Federal Reserve, together with the other federal supervisory agencies, has encouraged lenders and loan servicers to identify and contact borrowers who, with counseling and possible loan modifications, may be able to avoid entering delinquency or foreclosure.”

He admitted during his appearance that the scale of subprime losses has blown past almost all expectations. And the bad news keeps coming, as short-term low-interest rates will soon balloon as the honeymoon period wears off for thousands of mortgages.

It seems the worst is truly yet to come.

We at Mortgage Loan Place have devoted thousands of words to the subprime crisis over the past six months. We do it because we want to make a difference. Given the current, increasingly grim outlook, it’s a good time to start asking questions and understanding your options.

As part of its extended examination of the subprime disaster, the New York Times recently published a story that delves into how subprime mortgages became a lucrative staple for the nation’s largest home lender, Countrywide.

While the story is significant and worth your time as a whole, a few major themes jumped out and, ultimately, confirmed what we’ve been telling you for months now — the Federal Housing Administration can play a major role in healing the home-lending crisis for businesses and homeowners alike.

At one point, the story outlines how subprime loans wind up costing low-income homeowners significantly more than FHA loans. A few weeks before the story’s Aug. 26 run date, a former Countrywide sales rep priced a $275,000 loan with a 30-year term and a fixed rate for a borrower putting down 10 percent, with fully documented income, and a credit score of 620, according to the story.

And here’s where it gets interesting. With those terms, an FHA loan would have come with a 7 percent rate and 0.125 percentage points. Countrywide? Try a 9.875 percent figure and three more percentage points.

What’s more, the FHA loan would have generated a $1,829 monthly payment — that’s $558 a month less than the Countrywide monthly bill. Carry that over a year and you’re looking at an additional $6,696 a year, which, as the writer notes, is “no small sum for a low-income homeowner.”

Best of all, though, we couldn’t help but pass on a quote from that former Countrywide sales representative, which comes just after the story reveals those telling statistics.

“F.H.A. loans are the best source of financing for low-income borrowers,” the former sales representative said. He added that Countrywide’s subprime lending program “is not living up to the promise of providing the best loan programs to its clients.”

That story is one of the most recent and provocative examples yet of how an FHA loan can help borrowers grappling with foreclosure, mounting bills and all the other hassles and headaches associated with the subprime fallout. Whether it’s a refinance or a brand new loan, the FHA can help homeowners save their homes and economic futures.

We think it’s good to have a laugh every now and then, even if it’s about a serious problem.

Over a two-year span, Pew will give the funds to the Center for Responsible Lending to help strengthen underwriting standards, including verifying a borrower’s income, and ensure that borrowers have the ability to repay the mortgage after scheduled increases in the loan’s interest rate.

“American families have plenty of financial pressures facing them today and now too many have also fallen victim to mortgage schemes that can leave them broke or homeless, or both,” said Tobi Walker, Pew officer in Health and Human Services Policy.

Overall, about one in five people who obtained subprime mortgages in the last two years will wind up in foreclosure, according to the Center for Responsible Lending, a nonprofit advocacy group.

More than a half-million borrowers have lost their homes in the subprime market, and industry experts project that another 2 million or so are likely to meet a similar fate as the subprime crisis spirals.

With Pew’s support, the Center for Responsible Lending will work to protect all subprime borrowers by urging other federal and state policy makers with jurisdiction and industry leaders to adopt basic standards.